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This article critiques Section 45 of PMLA for imposing stringent bail conditions that conflict with fundamental human rights principles. It advocates for reforms to ensure fairer judicial practices aligned with constitutional guarantees and international standards, highlighting inconsistencies and the need for clarity in India's bail jurisprudence.
Introduction
“Bail is a Rule, and Jail is an Exception”, in the words of Hon’ble Late Justice Krishna Iyer. However, the contrary is true in the case of the Prevention of Money Laundering Act 2002 (PMLA), where Jail is the Rule and Bail is an Exception. Section 45 of PMLA mentions two conditions for the bail of an accused charged with any provision of the Act. First, that the public prosecutor has been given a chance to oppose the application, and second, that the court has reasonable grounds to believe that the accused is innocent and would not commit any offence while on bail. This is famously known as the Twin Bail Test.
Recently, in a high-profile case against the Delhi Chief Minister, Mr. Arvind Kejriwal, Rouse Avenue District Court granted bail to him after it was noted that the Enforcement Directorate could not provide any substantial evidence to deny the same. However, it was effectively stayed by the order of the Delhi High Court. Apprehension of the Court in granting interim bail is reasonable as this case involves a matter of national importance. However, the denial of interim bail indefinitely contravenes basic tenets of the Constitution and natural justice. It undermines the presumption of innocence, denies individuals their right to liberty without due process, and fails to uphold principles of fairness and proportionality in judicial proceedings.
Bail Dilemmas under the PMLA in Judicial Discretion
The Concept of Bail has a rich historical legacy deeply embedded in English and American legal traditions. Originating in medieval England, this practice emerged to alleviate the plight of untried prisoners held in unsanitary jails awaiting delayed trials conducted by itinerant justices. Under this system, prisoners were entrusted, or "bailed," to trusted third parties of their choosing who assumed the responsibility of ensuring their attendance at trial. Failure to appear would result in the bailor assuming the accused's legal responsibilities and potentially facing trial in their stead.
The law of bail seeks to balance two competing objectives: ensuring public safety by preventing potential harm from accused individuals and upholding the rights of the accused by providing them with the opportunity to await trial outside of custody.
In Moti Ram v. State of M.P., Justice Krishna Iyer highlighted that while the Indian Legal Codes categorise offences as bailable and non-bailable, they do not explicitly define the concept of bail. He pointed out that the sections dealing with bail are often ambiguous in their language. Justice Krishna Iyer emphasised the need to intervene against judicial arbitrariness that deprives individuals of their liberty.
The foundation of bail jurisprudence rests upon the principle of presumption of innocence, as articulated in Article 11 of the Universal Declaration of Human Rights. This provision states that every individual accused of a criminal offence is entitled to be presumed innocent until proven guilty in a court of law. The right to a fair and public trial, where the accused has access to all necessary guarantees for their defence, is integral to this presumption.
However, PMLA, which finds its origin in the Vienna Convention of 1988, the UN Conference for the Adoption of a Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, is contrary to the very principles of human rights advocated by the UN General Assembly, as it presumes that the accused is guilty until proven otherwise. It lacks an effective trial and persecution mechanism. Often, the accused languish in jails and are later found innocent.
The Convention requires Parties to implement necessary legislative and administrative measures in line with their domestic laws. Additionally, Parties must respect principles of sovereign equality, territorial integrity, and non-intervention in each other's internal affairs, refraining from exercising jurisdiction or functions that are exclusively reserved for another Party’s authorities under its domestic law.
This is done to counter money laundering, which refers to the process of converting criminal income into assets that appear legitimate and cannot be traced back to the underlying illegal activity. This process generally involves two key elements: the illicit source of the funds, often linked to criminal activities such as theft, drug trafficking, tax evasion, or corruption, and the methods used to disguise these funds as legal income. However, these blanket provisions without proper regulations can prove to be ineffective, and even disastrous.
Recently, the Jharkhand High Court granted interim bail to Former Chief Minister Mr. Hemant Soren in a money laundering case after concluding that there was no direct evidence to prove his guilt. It should be noted that Mr Hemant Soren had been in custody for almost 5 months, thereby restricting his fundamental rights and personal liberty. This raises questions on the effectiveness of the PMLA and its provisions as they might not be serving its intended objective. For instance, in Nikesh Tarachand Shah v. Union of India & Anr, the Hon’ble Supreme Court held that “insofar as it imposes two further conditions for release on bail, to is unconstitutional as it violates Articles 14 and 21 of the Constitution of India and struck down Section 45 of the 2002 Act as a whole”. The conclusion the court reached in this case was based on the fact that unreasonable delay is caused in granting bail, affecting the accused’s right to life and personal liberty under the fundamental rights. Therefore, they are against the basic tenets of the Constitution.
However, subsequent to this judgement, the government amended the PMLA Act, effectively nullifying the effects of the pronouncement and reinstating Section 45 with minor changes, as such, making the applicability of bail conditions uniform to all the offences under PMLA, rather than only for offences which are liable for imprisonment of more than 3 years. Further, In Vijay Madanlal Chaudhary v UOI, the Hon’ble Supreme Court overruled the Nikesh Tarachandra Shah Judgement and observed that the nature of Section 45 is not arbitrary and there is no absolute restrain on the interim bail condition.
These cases illustrate the inherent uncertainty surrounding bail provisions under the PMLA, where judicial discretion plays a pivotal role beyond the statutory framework. However, interpretations and applications of these provisions often vary across different cases and jurisdictions, leading to inconsistent outcomes.
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Is Power to Arrest Unreasonable?
Under Section 19, the Power to Arrest is given. According to this provision, after arresting a person under Section 19(1) of the PMLA, the Director, Deputy Director, Assistant Director, or any other authorised officer must promptly provide a copy of the arrest order. Along with this, they must also submit any relevant materials or documents in their possession related to the arrest. These materials are sealed in an envelope and forwarded to the adjudicating authority in the prescribed manner.
However, in Madhyamam Broadcasting Limited v. Union of India & Ors., the Hon’ble Supreme Court held that while national security considerations are significant, they cannot entirely supersede fundamental principles of natural justice. It emphasised that even in matters involving sensitive information, the right to a fair hearing remains paramount. The court held that the state cannot invoke absolute immunity in withholding materials pertinent to national security. It highlighted that not providing a reasoned order for denying license renewal, non-disclosure of relevant material, and reliance on sealed covers violated MBL’s right to a fair hearing.
Similarly, in PMLA cases, the accused are not provided with a copy of the arrest order, greatly reducing their ability to prove themselves innocent. It should be noted that the stringent bail conditions require the accused to prove their innocence even to secure an interim bail.
Comparing Bail Provisions with Other Jurisdictions
Unlike India, The UK has a special law on bail– the Bail Act 1976. This legislation streamlines the discharge provisions and also sets a time period within which an accused has to be tried and discharged. Custody Time Limits (CTL) protect defendants who have not been convicted, by preventing them from being detained before trial for an unreasonable duration. The laws and regulations overseeing CTL mandate that the prosecution must advance cases towards trial with promptness and efficiency. However, Indian Criminal laws lack such provisions, leaving the accused at the mercy of judicial discretion and police harassment through constant detention.
In the USA, state constitutions and statutes form the cornerstone of the pretrial release and detention framework across the nation. In 41 states, individuals who are arrested generally have the right to be released before their trial, as guaranteed by their state constitutions, which explicitly address the right to bail. However, in the remaining nine states and the District of Columbia, while their constitutions only stipulate prohibitions on excessive bail, detailed guidance on release and detention decisions is provided by statutory law and court rules.
European Union regulations and directives outline stringent guidelines. On procedural rights of suspects and accused persons subject to pre-trial detention and on material detention conditions, these guidelines ensure that individuals detained before trial are afforded essential rights and conditions. Procedural rights encompass fair treatment during legal proceedings, access to legal representation, the right to be informed promptly and comprehensively of charges, and the presumption of innocence until proven guilty.
Way Forward
Harmonisation between PMLA and Fundamental Rights: There is a need to harmonise the provisions of the PMLA with constitutionally guaranteed basic human rights. As has been highlighted in the case of Mr. Arvind Kejriwal, regulatory inconsistency and insufficient clarity with regard to bail provisions make it a perfect recipe for disaster. In the case of Ankur Chaudhary v. State of Madhya Pradesh, the Supreme Court emphasised that significant delays in completing trials under the NDPS Act could justify granting bail, even without meeting the strict conditions of Section 37. The court underscored that extended periods of imprisonment violate Article 21 of the Constitution, promoting conditional freedom over strict statutory limitations. Delay in granting bail to a person holding a constitutional position also underscores the disparity faced by ordinary citizens who lack such authority and are subject to these stringent laws undermining their fundamental rights. Therefore, it is urged that there is a need to revisit these provisions and harmonise them, so that they can achieve their objective without harming the innocent.
Fixed time frame for arrest, custody and bail: With a plain reading of Section 45, it becomes clear that there is no time frame between arrest and bail. In Bijay Ketan Sahoo vs. Enforcement Directorate, the Hon’ble Supreme Court granted interim bail to Sahoo after considering that he had not been arrested for three years and had complied with the investigation. Meanwhile, In the case of Mr. Arvind Kejriwal, the Hon’ble Supreme Court had refused to grant interim bail and later only given bail for contesting the Lok Sabha Elections. This highlights that there is no fixed frame. It just depends upon the discretion of the judge, which makes it arbitrary and often confusing. Therefore, it would make sense to fix a time frame between arrest, custody and bail.
Providing more clarity: There is a pressing need for greater clarity regarding the stringent provisions of the PMLA. While the objective of any law is to safeguard the innocent and prosecute wrongdoers, the provisions of the PMLA often blur this distinction.
Need for Bail Reforms: India does not have a special law covering all aspects of bail. In his article titled 'India’s Bail Jurisprudence: Need for Urgent and Comprehensive Revamp', Abhishek Manu Singhvi critiques the loopholes within criminal jurisprudence, particularly focusing on bail jurisprudence. Singhvi advocates for bail reforms, drawing support from the 268th Report of the 21st Law Commission of India. He argues that the current bail system in India falls short, describing it as 'inadequate' and 'inefficient' in achieving its intended objectives. Also, In Satender Kumar Antil v. Central Bureau of Investigation, the Hon’ble Supreme Court emphasised the need for uniform bail legislation. This underscores that India needs special legislation to cover all aspects of bail. It would help in simplifying getting bail and also make it much smoother and more convenient.
Conclusion
In conclusion, the analysis of Section 45 of the Prevention of Money Laundering Act,2002 (PMLA) reveals significant disparities and challenges within India's bail jurisprudence. The section's stringent conditions, often requiring accused individuals to prove their innocence for bail, conflict with fundamental principles of justice, such as the presumption of innocence and the right to liberty. Recent judicial interpretations and amendments have sought to address some of these concerns, yet inconsistencies persist across different cases and jurisdictions.
The comparison with international standards, particularly in the UK, USA, and EU, highlights India's need for clearer, time-bound bail provisions that balance the interests of justice and individual rights. The absence of fixed timeframes for arrest, custody, and bail under PMLA exacerbates uncertainties and potentially undermines due process.
Moving forward, there is a compelling need for comprehensive bail reforms that align PMLA provisions with constitutional guarantees and international norms. These reforms should prioritise harmonisation with fundamental rights, clarity in procedural requirements, and the establishment of uniform bail legislation. Such measures are crucial not only for safeguarding individual liberties but also for enhancing the effectiveness and fairness of India's criminal justice system as a whole.
By: Yatendra Singh
Yatendra Singh is a Second year Law Student at Dr Ram Manohar Lohia National Law University. He is keenly interested in Human rights and International Laws.
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